French Unions Dislike Eurocopterâ€™s U.S. AS350 Plan

Eurocopter has decided to assemble AS350 Ecureuil light helicopters in the U.S. to shore up its production capacity in Columbus, Miss., but the move is riling French unions.

Workers unions at the Eurocopter plant in Marignane, near Marseille, where the AS350 is produced, are uncomfortable with the move to disperse helicopter production to locations outside France, often as part of offset deals. Company managers say it is part of Eurocopter's strategy to be closer to the customer and not about reducing production costs.

“This is not about looking for low-cost production. If we wanted to do that, we could have moved production to Mexico,” said Dominique Maudet, Eurocopter executive vice president of global business and services, at the Helitech exhibition here last week.

He noted that the cost of producing aircraft in the U.S. is little different from doing so in France. “We are not de-localizing; we are just localizing. We are not saying jobs would leave [France] and go there, but we are developing the business in the U.S. This will increase the market share, and so this will benefit the European workforce as well,” he added.

The Columbus plant, staffed by a large number of U.S. military veterans, is the main assembly site for the UH-72 Lakota Light Utility Helicopter (LUH) for the U.S. Army. But the Defense Department's April 10 budget trimmed the planned buy of 346 Lakotas by more than 30 aircraft, ending production in 2014, which would bring an early end to what is seen as a critical contract for the European defense manufacturer.

“We are still fighting to get the Lakota numbers back up,” Maudet said. “We are not giving up.”

Maudet points out that possible Foreign Military Sales (FMS) could help boost production numbers. The government is negotiating the sale of six UH-72s to the Thai armed forces, the U.S. Defense Security Cooperation Agency (DSCA) announced in June.

The future of UH-72 production is now in the hands of Congress. Different budget committees have either supported the Army's plan to cut 2014-15 procurement or added back differing numbers of helicopters. The issue will have to be resolved in conference between the House and Senate later this year.

Eurocopter is keen to retain skilled staff in the hope that the Army's long-expected Armed Aerial Scout (AAS) program comes to fruition. EADS North America has developed several prototypes and carried out de-risking work on the AAS-72X+, an armed version of the Lakota at its own cost and risk. The aircraft would also be produced in Columbus, if selected by the Army, but the future of the AAS program is unclear.

The Army has issued another amendment to its request for information (RFI) on the AAS requirement, and completed another round of debriefings with contractors that participated in voluntary flight demonstrations (VFD) a year ago. The amended RFI and VFD debriefings indicate the Army is still working toward an AAS decision but not whether it will launch a competition for a new scout helicopter, extend the service life of the existing Bell OH-58D Kiowa Warrior or use Boeing AH-64D Apache attack helicopters in the scout role until it can afford a replacement.

Eurocopter says it dominates 50% of the U.S. commercial helicopter market, where the Astar is its biggest-selling product. Before the economic crisis, the company was selling roughly one AS350 every business day, but sales have fallen to around half that. With the company planning to produce 40 AS350s in 2014, increasing to 50 in 2015 and 60 in 2016, French workers are perhaps nervous about what the changes might mean.

But Eurocopter officials are bullish about the prospects. “The market is not permanent,” said Maudet. “We are a bit behind on Squirrel bookings, but this is not due to the commercial market but due to military deals.”

Columbus-produced AS350s will be delivered to U.S. customers, and Eurocopter is looking at the potential to deliver them to Canada and Central America, as well.